The Hagstrom Report

Agriculture News As It Happens

National Grain and Feed supports CFTC spec limits decision

The National Grain and Feed Association said today it “conceptually” supports the Commodity Futures Trading Commission’s decision Tuesday on final regulations implementing speculative position limits for agricultural and other commodities under the Dodd-Frank regulatory reform law.

The CFTC reached the decision on a 3-2 vote, with Democratic commissioners supporting the proposal by CFTC Chairman Gary Gensler and Republicans opposing it.

National Grain and Feed represents country elevators and other businesses that sell farm inputs and buy farm products.

“While the text of the CFTC’s final regulations has not been released yet — and will warrant close examination once it is — the National Grain and Feed Association does conceptually support the Commodity Futures Trading Commission’s action to continue to apply speculative position limits for enumerated agricultural commodities, which include grains and oilseeds,” the group said in a news release today.

“We believe speculative position limits are a reasonable way to help prevent investment capital from overwhelming these comparatively small markets and to help promote efficient contract performance for bona fide hedgers,” the group said.

“The NGFA also supports the agency’s action to limit hedge exemptions for swap dealers to the portion of their business with counterparties that are bona fide hedgers,” the statement continued. “This important reform will enhance contract performance and help encourage that convergence occurs in a timely and predictable manner for traditional market participants who are hedging physical commodity exposure.”

The NGFA said it does have some concerns about the CFTC’s interpretation of the bona fide hedge definition contained in the Dodd-Frank law.

“We will be reviewing the final rule very closely with the policy goal of maintaining the bona fide hedging status of commercial hedgers as traditionally applied by the agency,” the group said.